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The economic growth impact of tourism in Small Island Developing States—evidence from the Caribbean

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  • Colin Cannonier

    (Belmont University, USA)

  • Monica Galloway Burke

    (Western Kentucky University, USA)

Abstract

Tourism’s contribution to economic output in the Caribbean exceeds that in other regions of the world. We use panel data over the period of three decades, focusing exclusively on Caribbean islands, to study the causal link between tourism and economic growth. The results show that tourism has a positive and statistically significant effect on real Gross Domestic Product growth. A 10% increase in tourism spending is found to increase economic growth from 0.3% to 1%, a finding that is consistent with similar studies. A simple back-of-the-envelope calculation suggests that the overall tourism multiplier is around 0.25 which is smaller than estimates from previous studies. These results have important implications for researchers, industry practitioners, and policymakers.

Suggested Citation

  • Colin Cannonier & Monica Galloway Burke, 2019. "The economic growth impact of tourism in Small Island Developing States—evidence from the Caribbean," Tourism Economics, , vol. 25(1), pages 85-108, February.
    • Handle: RePEc:sae:toueco:v:25:y:2019:i:1:p:85-108
    DOI: 10.1177/1354816618792792
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    17. Xueying Huang & Yuanjun Han & Xuhong Gong & Xiangyan Liu, 2020. "Does the belt and road initiative stimulate China’s inbound tourist market? An empirical study using the gravity model with a DID method," Tourism Economics, , vol. 26(2), pages 299-323, March.
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